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Foreign Aid Canada

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Submitted By Redwing3139
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Future Strategic Direction for Foreign Aid Canada

TO: Foreign Aid Canada's Executive Management Team

From: Pat Innes

Subject: Review of the future direction of Foreign Aid Canada

Executive Summary:

Introduction:

The purpose of this report is to provide a strategic analysis of the alternatives available. The report will also provide a recommendations that will:

• That Foreign Aid Canada (FAC) will able to meet its new mandate of joining the fight against AIDS. • Meet the criteria set out by the CIDA officials • Ensure that Foreign Aid Canada (FAC)

This report will also provide analysis of the company's current situation and present all strategic and operational issues. The report also includes instructions on how to implement the recommendation should the owners adopt the alternative suggested by this report.

Situational Analysis:

Mission Statement:

Foreign Aid Canada provides humanitarian, emergency relief, development assistance through agricultural, water and irrigation projects, and HIV/AIDS prevention and treatment to African and Asian countries in need.

Vision Statement:

Foreign Aid Canada vision is for a world with out unnecessary suffering.

Strategic Goals/Targets:

• Foreign Aid Canada (FAC) wants to ensure that their decision to join the fight against AIDS is done in the most efficient and cost effective way possible while also meeting the requirements set-out by CIDA.

Stakeholder Preferences:

Dr. Barry Green (Executive Director) - Prefers to cut back on some emergency relief and developments projects or cutting back on internet expenses

Wayne Rice (Director AIDS Projects) - Prefers to outsource the administrative functions as he feels the current set-up does not provide adequate tracking for operating efficiencies.

Florence Taylor (Director Government Relations and Fundraising) - Prefers to increase funding through television advertisements.

Peter Lewis (Director) - Cut back on administrative costs instead of projects.

Linda Roberts (Director Finance & Technology) - Prefer to outsource administrative functions

Constraints:

• Project Activities Expenses must be less than 20% • Financial resources are limited • Must treat 3000 to 6000 AIDS patients per year • Projects Activity expenses for treatment must not exceed $700/per patients/per year • Disagreement among Executives on how to fund this new endeavour

KSF:

• Have a solid financial backing from the CIDA who has agreed to fund 75%-90% of the projects expenses • Have recently hired Wayne Rice who has extensive experience in fighting AIDS in South Africa. • Donations from outside sources (Corporations, Individuals) is expected to increase with the new mandate now including the battle against AIDS • Foreign Aid Canada (FAC) has a solid reputation as an effective NPO • The Foreign Aid Canada (FAC) Board of Directors is also backing this new initiative • Loyal employees

Current Financial Analysis

Please refer to Tab# 1 for detailed calculations

• When comparing the current ratio of 2012 (3.5) to 2011(3.64) we see a decreasing amount which indicates a decrease in the ability to pay current debt obligations. • The analysis of the quick rating shows that the while they are able to more then cover their current liabilities we do see a decrease when comparing 2012 (3.5) to 2011 (3.64) • Revenues did decrease from 2011 to 2011 by 6% but expenses also decreased by 6% which shows that FAC is able to adjust its operations based on the amount of donations they receive. • For the years 2011 and 2012 FAC is already below the expenses must be less 20% of total project activities as 2011 was at 16% and 2012 was at 17%. • When comparing FAC with its competitors it has lower admin costs as Canada Helps Inc (CHI) was between 19% and 21% and Catastrophe Aid Canada was at 20% • When reviewing FAC current solvency situation we see a decrease in the amount of revenue vs. total liabilities. For 2011 the ratio was 3.15 and then in 2012 the ratio was 2.9. FAC needs to ensure it will be able to meet its long term debt requirements.

Environmental Scan Analysis

Please see below for SWOT analysis:

Strengths • Backing of Board of Directors • Staff has experience with fighting AIDS in third world countries • Solid Financial backing from CIDA • Low admin costs

Weaknesses • Executives cant agree on what steps should be taken to ensure smooth transition to this new mandate. • Limited Financial Resources • Have constraints imposed on them by CIDA

Opportunities • CIDA has approached them directly about increasing their effort in the fight against AIDS • Other NGO's have discontinued their operations • Donations have increased since FAC announced the will join the fight against AIDS

Threats • The possibility of having to terminate staff members must reduce moral in with remaining work force • Have recently received negative press regarding a project they did in Africa

Identification of the Issues and Alternatives

Major Issues

• Limited financial resources • FAC executives don't agree on what is needed to implement the Board of Directors decision to join the fight against AIDS

Minor Issues

• FAC executives don't agree on where financial cutbacks need to be made. • Need to implement a more efficient and more reliable way to handle financial transactions that occur at the various projects FAC undertakes. •
Possible Alternatives

1. Locally Staffed AIDS Clinic
2. Mobile AIDS Treatment Units
3. Out Sourcing Admin or Support Services
4. Increased Communication Devices while on site at projects

Analysis of Alternatives:

Alternative 1

Locally Staffed AIDS Clinic - Please see tab#2

Pro • Meets Strategic goal of being able to join the battle of the fight against AIDS in a cost effective manner as the cost per patient is well below the CIDA requirement. • Meets the constraint of treating 3000 to 6000 patients a year • Mitigates weakness as donations have increased due to the decision to fight against AIDS • Aligns with the mission statement as it provides humanitarian relief while fighting AIDS

Cons • Is a the more expensive method of treatment • Initial investment is substantial • Requires more time for local governments to take over the responsibilities

Alternative 2

Mobile Units - Please see tab#2

• Was a cheaper option then Alternative 1 • Takes advantage of the less time required to train local workers • Was able to treat the required number of patients (3000-6000) • Meets Strategic goal of being able to join the battle of the fight against AIDS in a cost effective manner as the cost per patient is well below the CIDA requirement.

Cons • doesn't treat as many patients as Alternative 1 • has greater risk for workers as the mobile units will be traveling to more remote regions • Because political agendas are always changing it would be easier for a government to remove the mobile units then it would to remove a brick and mortar clinic.

Alternative 3

Pros • Aligns with the Strategic Goal of being efficient and cost effective • Meets the desire to join the fight against AIDS • The company has promised to meet or exceed service levels • The company has promised to hire back a large percentage of the staff

Cons • Has a high initial investment • Could reduce moral in the office • FAC will lose some control over this area of their company

Recommendation:

Based on the analysis provided above it is recommended that FAC should implement the mobile clinics as it is the cheapest alternative which also allow FAC to maintain its other commitments to other projects it has. Also the ability to transfer it over to the local government sooner then the other alternative means that FAC can look to other areas to continue the fight against AIDS.

Also FAC should consider outsourcing its alimentative tasks as this is in align with the mandate to join the battle against AIDS in a cost effective manner. The outsourcing does have the high initial investment but over the longer term it does provide financial relief for FAC. The company also promises to increase or maintain the current level of service that FAC provides

Implementation Plan

Wayne Rice • Responsible for working with the local government to set-up the mobile units

Florence Taylor • Will work with CIDA to secure funding

Conclusion

Going forward with the recommended alternatives will ensure that FAC will be able to adhere to its mission statement by joining the fight against AIDS in a cost effective manner. FAC has the ability to be a major player in this battle but it must adhere to what has made it a successful company.

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